Profits at the UK arm of Zara dropped in the year to 31 January, following investment in refurbishing stores and moving its London head office.
Pre-tax profits at its British business dropped by 32.7% to £39.2m, despite a 12.6% rise in sales to a record £602.7m, documents filed at Companies House show.
The Inditex-owned retailer pointed to an 11% jump in selling and distribution costs. During the year, as part of an ongoing refurbishment programme, it extended its Bristol store and relocated its unit in the Manchester Trafford Centre.
It also refurbished some of its London stores to “keep the layout and atmosphere in line with the Zara brand image”.
It moved its UK head office from Regent Street to New Bond Street in April 2016.
At 31 January, Zara had 66 stores in the UK, down from 68 the year before. It closed two stores at the end of the financial year, in London Oxford Circus and at Gatwick airport.
“Barring any unforeseen circumstances, the directors plan to open further stores as soon as suitable opportunities arise and for the company to increase profitability as a result of the continuing increase in sales,” the accounts said.